Introduction
Success does not just happen in the modern marketplace, but is a result of careful planning and circumspect adherence to the established plan. In this context , circumspect can be construed to mean dynamic and adaptive since adherence to the plan is limited to the secondary factors that may befall the company from its internal and external environment (Wheelen et al, 2017) . The strategic plan is the combination of the well established plan and the circumspect arrangement of how it will be followed . The strategic plan is based on a careful analysis of the internal and external environment of the company, company history, and the intended future of the company. Verizon Wireless is the largest mobile and allied services provider in the USA. However, in the recent past, the company has seen a slight stagnation in its finances although this stagnation has not been accompanied by reductions in customer base or volume of business. However, the company must ensure that the stagnation must be followed by a resurgence, not a plummeting as this would result in the collapse of the company. The company’s strategic plan, therefore, is not just about the future of the company but also its survival and must include an element of aggressive change.
Company History and 4 Ps
Verizon Wireless begun its operation in the year 2000 with a merger between Bell Atlantic, an American Communication corporation and Vodafone, a renowned UK communication company. The history of Verizon wireless thus goes back into the twin histories of the two communication experts. At the time of the commencement of Verizon Wireless, Bell Atlantic was also in the process of merging with GTE Corporation (Verizon Wireless, 2018) . The joint venture between Bell Atlantic and Vodafone would assume the name Verizon, so would the new company formed through the merger of Verizon and GTE Corporation. The former became Verizon Wireless while the later became Verizon communication. In 2014, Verizon communication bought out Vodafone thus, becoming the sole owner of Verizon Wireless (Verizon Wireless, 2018) . By that time, Verizon Wireless had grown to become the largest wireless service provider in the USA with over a hundred million customers and valued at over US$ 290 billion. From 2014 to date, the company has continued to grow and expand both in its customer base, the volume of services, revenues, and profits. However, 2016 marked the beginning of unhealthy competition between Verizon wireless on the one hand, and Sprint Corporation and T-Mobile on the other. This competition has seen the company’s revenues stall briefly. Verizon Wireless has also built and acquired a massive land infrastructure which it uses for its services and also started officering the same on mobile virtual network operator (MVNO) basis. Comcast Corporation is among its largest MVNO clients.
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The Four Ps of Verizon Wireless
The product supplied by Verizon Wireless is mobile communication and internet services. This product includes the infrastructure necessary for customers to use their mobile devices to communicate with one another and also access the internet. Currently, Verizon also avails its massive communication infrastructure to other companies on an MVNO basis (Verizon Wireless, 2018) .
Verizon uses pricing as a marketing strategy thus keeps its prices low and at par with its major competitors. In recent times, the company has even been involved in price wars with Sprint and T-Mobile. Verizon thus seeks to make profits through the volume of sales as opposed to premium pricing. About place , Verizon is currently the widest mobile service network in the USA covering approximately 98% of the entire US population (Verizon Wireless, 2018) . Finally, when it comes to promotion, Verizon employs an aggressive, widespread and expensive advertising campaign to reach out to new customers, retain the current customers, and also maximize its sales to its customer base.
Mission Statement and Its Impact
The Verizon Mission statement is: “We deliver the promise of the digital world to our customers. We make their innovative lifestyles possible. We do it all through the most reliable network and the latest technology.” It can be divided into three main components each of which has an impact on the running of the company (Gregory, 2017) . The first is the promise of delivering the digital world to its customers, and it drives the company towards expansion and innovation. Expansion ensures that more of its intended customer base, the USA have increasingly better access to its services. Innovation ensures that the services provided are digital and constantly improved. The innovative lifestyle aspects mean that the kind of services that Verizon seeks to provide are not just an amenity but are designed to change the lives of their customers. Verizon seeks to establish what their customers need then surpass their expectations. Finally, there is reliability and the use of the latest technology which defines the means that Verizon seeks to use to achieve its goals (Gregory, 2017) .
Current Situation
When Verizon began in the year 2000, mobile telephony was simply an amenity that most people felt the need for and used as a means of communication. CDMA and GSM-based standard phone dominated the industry . By 2008, the smartphone had changed the industry and made a mobile phone a basic need for almost every adult and even most minors. It is also in 2008 that the industry changed completely with the advent of the iPhone and its iOS operating system. From them on, the mobile phone began to expand in necessity and usage taking over from a variety of devices including the computer. Consequently, the mobile phone industry has grown into the largest technology industry if not the largest industry in the world. The opportunities available for Verizon wireless based on the scope of the industry are infinite. The market available to be tapped by Verizon is as large as Verizon would aspire as long as the company can ably compete with the other players in the industry . About the general environment, this is Verizon’s time. Technological trends change exponentially and rapidly, and the mobile phone may have reached its zenith. It is time for Verizon to capitalize and make massive profits before new trends appear, and the mobile phone is relegated to the periphery.
SWOT Analysis
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Strengths Strong financial backing from the parent company. Verizon did not have to start from scratch as it was a joint venture between two powerful multinationals. Whenever the company needs to make critical investments , its parent company(s) can chip in. Powerful Brand Verizon is the most powerful mobile service brand in America which makes for a powerful marketing tool and an advantage over its competition (Verizon, 2018) . A wide pool of human talent in technological innovation. For the last 18 years, Verizon had been on a human talent relating to innovative technology. The human talent gives Verizon an advantage in technological innovation. A wide customer base with over a hundred million subscribers. Verizon has customers in almost all areas of the USA making for a vast cross-section of loyal customers (Verizon, 2018) . The company thus has a cushion in the case it runs into hard times. A strong, relevant asset-based that guarantees a strong and wide coverage. Verizon has over the last ten years been investing in communication infrastructure including buying chattels from television companies. The infrastructure gives the company an advantage in reaching its customers. Technological advancements that a quality of service slightly better than its customers When it comes to quality service, industry commentators place Verizon as the very best due to its technological advancements. This gives the company a marketing advantage over the competition. |
Weaknesses High operational costs including premium salaries. Verizon relies on some of the human talents in the world for its operations, and this comes at a massive cost (Verizon, 2017) . The high operational cost becomes a disadvantage due to price wars with the competition. Poor Diversification For the last 17 years, Verizon has specialized in mobile service provision. The specialization is dangerous since if the one segment of operation is affected, it affects the entire company. A coverage that is limited to only one country thus only one economy . Verizon was started by two multinationals but has remained focused solely on the American market. Lucrative as the American mobile market is, the company is losing out on the massive international markets. A good example of rapidly expanding markets is India, China, Brazil and parts of Africa. A marketing strategy that involves confrontation instead of specialization . The current financial stagnation at Verizon has mainly be caused by Price wars with its closest competitors Sprint and T-Mobile. Seeking to fight these companies head-on is a strategy that is not working very well for Verizon since 2016. |
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Opportunities A growing mobile market locally and internationally is driven by the proliferation of the internet. The mobile phone today is exponentially different from the one in the year 2000 when Verizon began . People are continually relying on the mobile phone for more duties due to internet- related technological advancements. With every change of the mobile phone, new opportunities arise for Verizon. Expansion into a mobile platform based purely on the internet. The 4G LTE platform that Verizon is experimenting in creates a major opportunity for the company as it enables all functions including voice calls to be undertaken on the internet (Verizon, 2017) . The service is currently available for about 4 million customers. There is, therefore, an opportunity to expand to the remaining over 140 million customers. Capacity to increase revenue per customer due to expanded use of mobile phones. With the widening use of mobile phone defined above, Verizon can increase revenues per customers not just the number of customers. Opportunity to expand into other mobile devices apart from phones. Twenty years ago, the mobile phone was just penetrating the mainstream market. Ten years after that, the smartphone dominated most lives in America. Today, a shift is taking place with gadgets such as smart speakers and Android devices becoming prominent. Verizon has a chance to invest in the new technology and change with the times. |
Threats Stiff competition more so from Sprint and T-Mobile. As a late entrant into the mobile service market. Verizon has always had to deal with competition. However, from 2016, the stiff competition from Sprint and T-Mobile has had a major advance effect on the revenues of Verizon High Cost of technological advancements. Technology is mainly about machines, but technological innovation is all about human talent. Currently, there is a very high demand for technology-based human talent making it very expensive. Further, getting technological talent certified and licensed is also very expensive. Extreme industry regulation formally and informally. Verizon has to worry about formal regulation based on the industry it operates in . Due to issues such as security, these regulation has advanced. On the other hand, informal regulation in issues such as labor, human rights, and the environment are on the rise and pose a major risk for companies such as Verizon. Product variations by different mobile phone manufacturers. Apple Inc. basis its products on its iOS while Samsung and several manufacturers use Google’s Android. Microsoft has developed Microsoft Mobile while Blackberry, another major player uses its own BlackBerry OS. Mobile service providers including Verizon have to ensure that their products are compatible with all these operating systems. In some cases, different versions of the same product have to be produced and maintained which increase costs. Natural disaster risks Mobile phone service infrastructure in the USA includes physical infrastructure including masts and lines. The physical elements stand to be affected or even destroyed in the case of a massive natural disaster which in recent times have been on the rise. |
Essential Areas in the SWOT Analysis
Essential Area 1: Combination of the Weakness 2 and Opportunity 4
The stagnation of revenues that has checked the continuous revenue growth that Verizon had enjoyed for an extended period is an indication that mobile telephony may have achieved its zenith. While this specific industry of mobile services is still palatable, Verizon must begin planning for a future that might not be dominated by mobile phones. Weakness number two lies in the fact that mobile services are the only core services provided by Verizon mobile. Opportunity number four relates to the fact that there are many other opportunities that the company can pursue without having to change its vision and mission. A key technological diversification can be the futuristic internet of this industry. It is possible that in future ; there will no longer be a mobile phone, just a mobile provider like Verizon. Instead of having an actual gadget called a mobile phone, customers will use whichever component of the internet nearest to them such as a TV or even a seat (Bajarin, 2017) . Verizon must begin to prepare now for such an eventuality, through diversification of its product base.
Essential Area 2: Combination of Weakness 4 and Threat One
Verizon is the largest mobile and allied services provider in the USA, but it does not even handle half of the available market. The second largest company, AT & T handles a market base that is almost as large as Verizon. However, the greatest competition comes from the other two largest national service providers; Spring and T-Mobile. Verizon has had to handle stiff competition right from its inception and has always won the war but from 2016, fighting the competition war has been taking an inordinate toll on the company. Threat one is massive competition while weakness number four is employing a confrontational approach to competition. Verizon, the largest mobile service provider should assume the approach taken by Apple Inc., its alternate in the mobile phone manufacturing industry. Instead of seeking to compete with other mobile phone manufactures, Apple has been creating a niche where the competition does not seem to exist (Trotman, 2015) . In the Chinese market, for example, Apple sometimes seeks to compete with manufacturers who sell smartphones at 10% the price of an iPhone. Apple does not try to sell as many phones as they do but instead tries to make fifteen times as much money per sale than they do. Apple beats the competition without even contorting the competition. Verizon must take advantage of its superior quality of services to create a special operational niche where it does not have to worry about Sprint and T-Mobile. A good example would be using innovative technology to create premium services for premium prices. The premium services might include half the number of customers but triple income per customer thus becoming an expansion (Davcik & Sharma, 2015) .
Essential Area 3: Weakness Three and Opportunity One
Verizon Wireless has been operating only in the USA and, therefore, having to contend with some of the most formidable competitors in the world on a constant basis. America is perhaps the greatest technology market in the world and should never be abandoned, but Verizon also needs to expand and take advantage of the international market. Weakness three relates to having only the local market while opportunity one relates to expanding to the international market. If Verizon shifts to premium products at premium prices as indicated above, customer numbers will plummet as predicted. To raise those numbers and still retain premium pricing, the company should expand geographical scope internationally. Premium pricing is mainly for the middle class, and massive middle classes are mushrooming all over the world (Davcik & Sharma, 2015) . Nigeria for instance, a West African country is almost moving into the top twenty largest economies in the world, meaning a large middle-class population. China, India, and Brazil also have massive middle classes that are growing by the day. Expanding into these markets can be very profitable for Verizon into the future.
Summary of Environmental Scan and Porter’s 5 Forces
Verizon Wireless is at a crossroads. The company spent US$ 70 billion in the year 2000 to create a path and has been walking in this beaten path while gradually expanding it. However, as per Williams (2017), the beaten path began to fail Verizon in 2016. The rapid expansion begun to slow down, revenues began to stagnate, and the competition began to get the better of Verizon. On the one part, the company has a powerful asset base, better than any other within its industry. The company also has an impressive human talent capable of evolutional innovation in technology. Finally, the company also has a powerful brand with a stellar quality record in the USA, and any company with a positive technological reputation in America can penetrate almost any market in the world. All that is going well for Verizon . However, the competition is having a crushing effect on the company while other technological advancements such as the combination of cloud computing and internet of things might replace the mobile phone in the future. The new strategic plan must involve massive operational changes.
International Performance
Verizon has mainly been operating locally and has not sought to exploit the international market.
Financial Performance
According to Verizon (2017), the company has been on an upward trend in all parameters from revenues to profits until 2016 when there was a dramatic stagnation both in revenues and in income. This financial performance has also been reflected by the assessment of the accounts r elating to 2017 that have already been released leading to apprehension by the relevant commenter. The situation reflects a company that has reached the highest point that its current strategic plan can achieve. Stagnation in commerce is only temporary and can either lead to resurgence or plummet depending on how it's handled .
Operational budget
T he operating budget for Verizon wireless according Verizon (2017) had been on a constant decrease from 2014 to 2016 beginning at US$33 billion in 2014 and raised to US$31 billion in 2016. This is reflective of a company that is still seeking to expand its operations. The fact that the increase in operational cost is not congruent with an increase in revenues and income reflects a strategic plan weakness.
Key Performance Indicators
Positive Indicators
Key performance indicators for Verizon between 2014 and 2016 do not agree with the financial situation of the company. It is clear that the company has been investing its operational budget properly to maintain proper performance. The number of customers have been on the increase and giving positive reviews to the company. Industry commentators including RootMetrics and RootScore Reports have been giving stellar reviews to Verizon, indicating it as the best in the industry. The scope of available services has also been expanding thus, creating secondary means of earning from primary clients. Based on its current strategic plan, the company has been operating within acceptable parameters.
Negative Indicators
As a way of establishing how Verizon has been financing its operations , it is critical to evaluate its debt to equity ratio and debt to asset ratio. The debt to equity ratio gradually increased and reached its zenith in 2015 then begun to plummet and has been plummeting to date. Up to 2015, therefore, Verizon had been getting enough investors and interested parties to invest in its activities. The outcomes of the debt to equity ratio plummeting can be reflected by the dent to assets ratio that has been on the rise since 2015. When Verizon lost funding from equity, it turned to debt as the source for operational costs which makes it a dangerous trend.
Overall Financial Position of the Company
In 2014, Verizon Wireless invested US$ 33 billion and made a revenue of US$ 87 billion
In 2015, Verizon Wireless invested US$ 32 billion and made a Revenue of US$ 91 billion
In 2016, Verizon Wireless invested US$ 31 billion and made a revenue of US$ 89 billion
The company has been investing less in operational costs since 2014 which reflects innovative use of resources since the company has been expanding its services. 2015 can be said to be the best year for Verizon as the company got higher revenues from a lower investment. The investors took notice hence the increased debt to equity ratio. From 2016, the tide seems to have turned with both lower revenue and a lower equity investment. Verizon Wireless is not in a financial crisis. For a start, it is still raking in revenue that is more than 100% of the operating costs thus even the borrowed monies are making profits. However, the trend has changed with reduced revenues and needs to be checked before it leads to a future crisis.
Effects of Operational Budget on Three Year Strategic Plan
The trend of reducing the operating budget has not be seen to aid the company as the same has also reduced the revenues. Further, the reduced budget failed to stimulate investors leading to a high reliance on debt. The suggested three-year operational budget will entail an augmentation of expenses as the company expands in services, geographical area, and product scope. Further, the strategic plan will come with major positive projections into the future which will attract equity investors and take the company away from a reliance on debt.
Organizational Structure
The new strategic plan for Verizon Wireless seeks to transform the company from a singular entity that pursues one core interest within one country into a multidimensional multinational. The new look of the company will not only be dealing with a variety of products but also operate in different countries. The only organizational structure that can fit the new Verizon Wireless is the Multi-divisional form (MDF). Under the MDF, there will be one overall leader, preferably the president of the company who will be assisted by a number of deputy presidents each dealing with a different division of the company. The different divisions will work towards a common goal but might engender a form of identity based on the activities they will be carrying out. Eventually, some of these divisions may even be situated outside the USA.
Impact of the Strategic Plan on the Organizational Culture
Verizon Wireless has in the recent times developed the organizational culture of the people’s company and all American Corporation. Both of these basic elements of its organizational culture are about to change, under the suggested organizational plan. After adopting the premium products at premium pricing strategy, the company will most likely be considered as elitist and discriminatory against customers of limited means who might be forced to find another service provider (Davcik & Sharma, 2015) . Secondly, just as with Apple Inc. a day might come when Verizon Wireless will make more money outside the USA than within it which will affect its all American tag. Proper marketing and corporate social responsibility (CSR) will, however, cure the negative perceptions that might come with these changes. The most fitting CSR areas to invest in are those that create the impression that monies made through premium service sale to the rich are being used to aid the poor.
Strategic Goals
Essential Area 1: Combination of the Weakness 2 and Opportunity 4
Liaise with manufacturers and establish which futuristic gadgets such as internet of things items require connectivity services that Verizon wireless needs.
Development of new technologies for these products which are closely related to mobile service technology
Establishment of a division of the company whose operations can outlive the end of mobile phone dominance.
Essential Area 2: Combination of Weakness 4 and Threat One
Develop an innovative new premium mobile service package that can attract a premium price.
Roll out the premium service product alongside the already current available ordinary mobile service product.
After testing, monitoring, and evaluation, making the necessary changes to refine the premium product.
Gradually eliminate the current common products thus leaving the premium service product alone in the market.
Essential Area 3: Weakness Three and Opportunity One
Earmark several international market areas where Verizon Wireless can roll out its premium services only.
Buy out some players within these markets to create entry points for Verizon Wireless
Roll out the premium services into these international markets.
Marketing Positions and Opportunities for Growth
Each of the three essential areas will require a director of marketing and a team of marketers, and there will be novel products being developed and solved. The normal operations of the company will continue unabated as the new areas are developed . The expansions will thus open up new room for new marketers, new marketing managers, and even new marketing directors. There will also be opportunities for growth to innovative technological talent who will have to develop new products under each of the three segments indicated above.
Plan to Measure Success
The strategic plan indicated above can be reduced to three mega objectives that have been further reduced into strategic goals. Each goal can then be broken down into projects that will operate concurrently and consecutively depending on their components. Comprehensive monitoring and evaluation processes can then be applied to the goals thus, providing a means of measuring the singular and collective success of the strategic plan.
References
BAJARIN, T. (2017). Will Smartphones Ever Be Obsolete? Retrieved February 14, 2018, from http://time.com/4744303/will-smartphones-ever-be-obsolete/
Davcik, N. S., & Sharma, P. (2015). Impact of product differentiation, marketing investments and brand equity on pricing strategies: A brand level investigation. European Journal of Marketing , 49 (5/6), 760-781
Gregory, L. (2017, June 20). Verizon's Vision Statement & Mission Statement - Analysis & Recommendations. Retrieved February 15, 2018, from http://panmore.com/verizon-vision-statement-mission-statement-analysis-recommendations
Trotman, A. (2015, April 27). Apple sells more iPhones in China than the US for the first time. Retrieved February 14, 2018, from http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/electronics/11567022/Apple-sells-more-iPhones-in-China-than-US-for-first-time.html
Verizon (2017). 2016 Annual Report: Building a Connected World and a Better Future for Everyone. http://www.verizon.com/about/sites/default/files/annual_reports/2016/index.html
Verizon Wireless, (2018). Verizon Wireless ( Cellco Partnership ). https://www.verizon.com/about/homepage
Wheelen, T. L., Hunger, J. D., Hoffman, A. N., & Bamford, C. E. (2017). Strategic management and business policy . New York: Pearson
Williams, T. (2017, January 25). Verizon's weak 2017 outlook forces analysts to question plans for growth. Retrieved February 14, 2018, from https://www.marketwatch.com/story/verizons-weak-2017-outlook-forces-analysts-to-question-plans-for-growth-2017-01-25
